Request that the Christmas Bonus, Cash Gift, Representation and Transportation Allowances of Employees be Exempt from Income Tax

February 14, 1991 BIR RULING NO. 027-91 21(a) 013-90 027-91 Gentlemen : This refers to Resolution No. 46-90 of the Sangguniang Bayan of San Pascual, Masbate and Resolution No. 34 of the Sangguniang Bayan of Bombon, Camarines Sur, which your Office forwarded to us on September 28, 1990, requesting that the Christmas bonus, cash gift, representation and transportation allowances of the employees be exempt from income tax. In reply, please be informed that this Office, in its Ruling No. 013-90 issued to that Office on February 1, 1990, has ruled that the representation and transportation allowances paid to local government employees cannot be exempt from tax being a part of the remuneration or compensation paid to local government employees throughout the country. Christmas bonus and cash gifts are also considered compensation and therefore, subject to income tax and consequently to the withholding tax on wages prescribed by Section 72 in relation to Section 21(a) Chapter X, Title II of the Tax Code as amended, and implemented by Revenue Regulations No. 6-82 as amended. cdti Very truly yours, (SGD.) JOSE U. ONG Commissioner